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Friday, July 19, 2024

HNX debuts corporate bond trading system

The Saigon Times

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HCMC – A corporate bond trading system has been launched to facilitate the buying and selling of corporate bonds for professional investors.

The Ministry of Finance held an inaugural ceremony for the corporate bond trading system on the Hanoi Stock Exchange (HNX) on July 19.

The trading system is now open to investors and operates with trading sessions similar to stock trading, using the T+0 payment mechanism. This means that funds or bonds are immediately credited to investors’ accounts. Trading sessions are available from Monday to Friday, divided into morning and afternoon sessions, excluding public holidays.

To participate in corporate bond trading, individuals must qualify as professional investors and have a trading account with a securities company that is a member of the trading system. These authorized members are responsible for assessing investor eligibility and ensuring compliance with the specified criteria.

Investors can execute bond transactions through block deals or matching trading methods. On the same day, five million bonds worth nearly VND1.8 trillion were traded.

The HNX will regularly publish information on registered corporate bond codes, total trading volume, and market value.

The trading system has been test run by the Vietnam Securities Depository since June, demonstrating stable performance and meeting the required standards for order placement, information retrieval and system management.

Following the successful testing phase, the HNX plans to list over 1,600 unique corporate bonds on the platform.

The introduction of this trading system is expected to enhance market liquidity and provide valuable insights for regulators, market participants, and investors, according to the Ministry of Finance. Minister Ho Duc Phoc said that the launch of the system reflects the ministry’s commitment to strengthening the financial market, particularly the stock market, and establishing a channel for medium- and long-term capital mobilization.

By facilitating efficient management and supervision of corporate bonds, the trading system will enhance market transparency and quality. This is crucial as certain companies have previously violated disclosure laws and misused funds, impacting market sustainability. Concerns have also arisen regarding the repayment capacity of companies with a large volume of corporate bonds nearing maturity, as well as their ability to issue new bonds in challenging economic conditions.

In 2020 and 2021, the Vietnamese corporate bond market experienced significant growth, with issues totaling around VND462 trillion and VND658 trillion, respectively. However, this growth was marred by misconduct involving major real estate developers.

Corporate bonds are long-term debt securities issued by companies to acknowledge their obligations to bondholders, and they can be issued publicly or through private placement.

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